The Traderszone Network

Chinese police are investigating if two distillers added impotence treatment drug Viagra to their liquor in the latest food-safety scare in China.

Beyond multiple expansions driven by liquidity, sales and earnings drive stocks.

Of the two, sales are most important for determining economic conditions. Earnings can be massaged any number of ways. However, sales cannot. Either the money came in the door or it did not.

Unfortunately for the bulls, sales are falling.

1Q15 sales came in 2.4% below 1Q14. And the trend has not improved since that time.

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TD Securities/Melbourne Institute (MI) Inflation for July
+0.2 % m/m
– prior was +0.1% m/m
 +1.6% y/y
– prior +1.5% y/y
–
The ‘trimmed mean’ for July is +0.1% m/m & +1.5% y/y

Once the epitome of cheap mass manufacturing, textile producers from formerly low-cost nations are starting to set up shop in America. The NYT reports.

Australia – CoreLogic RPData house price index for July: +2.8% m/m (prior was 2.1%)
– +2.8% m/m and +11.1% y/y (+9.8% prior)
– Sydney house prices +18.4% y/y (+3.3% m/m)
Other capitals and areas not nearly as strong:

The market had a decent recovery week, but the indexes still have their work cut out if they want to go one and make some new highs. The second half of the year should be interesting.

Energy continue to me a dead weight and has been a bit of a drag on the S&P although its weighting in the S&P is a lot less than in years past, so it could be worse.

Actually as bad a XLE looks its flashing a very sold reading, so it may be good for trade on the long side this week. I will play ERX if I decide to do anything.

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The Wall Street adage “Sell in May and go away” chronicles the historical underperformance of stocks during the summer months.